Nvidia stock traded at $229 on Tuesday, sitting just under its year-to-date high of $236 even as the company rolled out a $150 billion share repurchase plan this week. The pause is notable because several forces that typically lift a stock are lined up in Nvidia’s favor, from heavy artificial intelligence spending to a valuation that looks cheap against the company’s own history.
The new buyback is part of a much larger commitment. In total, management plans to repurchase more than $235 billion worth of shares, a move the report ties directly to how undervalued the company appears on several standard metrics.
Still, the shares have not broken out. Worries about an AI bubble, rising competition from customers designing their own chips, and questions about circular investing are keeping buyers cautious. On the chart, bullish and bearish patterns are forming at the same time, which puts the focus on two price levels: $236 above and $213 below.
Why the Rally Has Hit a Ceiling
Bubble fears and circular investing
The biggest drag on sentiment is fear that the ongoing AI boom has turned into a bubble. Closely linked to that is the circular investing concern. Nvidia invests in its customers, who then use those resources to buy its chips. Most recently, the company organized funding from some of the largest companies in the United States, including Goldman Sachs and Brookfield.
Big customers are building their own chips
Several of Nvidia’s largest buyers are developing alternatives that could weigh on its demand and margins over time:
| Company | In-house chip effort |
|---|---|
| OpenAI | Unveiled a chip called Jalapeno |
| TPU gaining market share in computing | |
| Amazon | Own chips performing well |
| Microsoft | Own chips performing well |
The Growth Case Behind Nvidia Stock
AI infrastructure spending keeps climbing
Analysts expect the data center buildout to continue. Bain predicts AI spending will jump to $6 trillion in the next few years, while a PwC report projects it will reach $32 trillion by 2032.
Nvidia is positioned to capture a large share of that money. Its Blackwell chips are widely used by major companies, including Microsoft and Amazon.
Revenue expectations
The average analyst estimate calls for annual revenue to rise 90% this year to $411 billion. In its recent report, Nvidia itself said annual revenue will grow 70% next year.
The report argues the actual figure could come in much higher, since Nvidia tends to be highly conservative with its guidance.
The China factor
One example of that conservatism: management left its China business out of its forecasts. That could change, as China is reportedly considering allowing top companies such as ByteDance and Alibaba to purchase Nvidia’s advanced chips.
Valuation Makes the Buyback Case
By several measures, Nvidia stock looks inexpensive relative to its own past and its sector.
| Metric | Nvidia | Comparison |
|---|---|---|
| Forward P/E ratio | 24 | Five-year average of 42 |
| Forward PEG ratio | 0.47 | Sector median of 1.25 |
The company’s rule-of-40 multiple is also described as highly encouraging. That valuation picture explains the timing of the $150 billion repurchase announcement.
Buybacks are generally viewed as bullish because they reduce the number of outstanding shares, which lifts earnings per share. According to the report, it also means investors will receive more dividends.
What the Chart Is Signaling
Bullish signals
On the daily chart, NVDA formed a double-bottom pattern at $190, with a neckline at $213, which was its highest level on July 15 this year. That pattern usually leads to further gains over time. The stock also remains above both its 50-day and 100-day Exponential Moving Averages (EMA), another bullish sign.
Bearish signals
At the same time, the stock has formed a diamond reversal pattern, which typically precedes a bearish turn. It has also run into substantial resistance near its all-time high.
Levels to watch
| Level | Price | What it means |
|---|---|---|
| Resistance | $236 | A move above confirms a bullish breakout, with potential toward $250 and above |
| Support | $213 | A drop below invalidates the bullish outlook |
Where Nvidia stock settles relative to these two levels will likely determine whether the AI spending story or the risk narrative wins out in the near term.
Disclaimer: This content was partially produced with the help of AI tools and This content is for informational purposes only and not investment advice.
